Digital transformation: Face it or face disruption.

Trying to imagine the magnitude of the digital transformation we are in at the moment can be quite a challenge. Jacques Boschung found good explanations and cautions to prepare for what is coming.

When chessboards and Moore’s Law coincide.

Have you ever tried to explain to your children – or your parents – why everything is changing so fast, lately? Here’s a helpful tip: explain the old Persian Tale of the ̀second half of the chessboard’ to them, and Moore’s Law, and they will suddenly understand. But beware, you may scare them silly by the sheer unpredictability of what is to come in the next few decades.

According to the myth, the Shah of ancient Persia rewarded the inventor of the chessboard by giving him a grain of rice for the first square of the chessboard and doubling that on the second square and doubling again and again for every square that followed. Can you imagine how big the reward was, a few rows on? By the 32nd square, the prize amounted to 4 full trucks of rice. If you have every studied mathematics, you can guess what comes next. On the second half of the chessboard, things get really strange. By the end of the chessboard, the pile of rice is bigger than Mount Everest and equals the rice production in China over a period of 1,000 years. What you should probably not tell your children: as the story goes, the Shah had the inventor beheaded when he found out what he had been tricked into.

This is what exponential growth means

The scary things that happen on the second half of the chessboard bear a great resemblance to what Moore’s Law demonstrates. As a reminder, Moore’s Law stipulates that computing power doubles roughly every 18 months. If you take 1958 as the first square on your chessboard, then 2006 was the year when we reached the 32nd square. From that year onward, we witnessed the boom in social media, the advent of smartphones and tablets, the breakthrough of intelligent robotics. We now routinely talk about driverless cars, predictive analytics, artificial intelligence, the Internet of Things, smart cities, Blockchain and so on. Subjects we hardly addressed 15 years ago. Mind you, we are still dabbling in the first row on the second half of the chessboard. If digital power keeps doubling, what will happen in 2030? And 2040? No one knows. If you tell this to your children, allow them to let their imagination run wild.

OK, now you’ve told the story to your children and parents. Enough practicing, high time to discuss the digital future with your management. A recent survey conducted by Vanson Bourne on behalf of Dell EMC showed that business leaders are still grappling with the concept of digital transformation. Over half of the 4,000 business leaders polled across 16 companies said that they had experienced significant disruption in their industries as a result of digital technologies, and 48% admitted that they don’t know what their industry will look like in three years’ time. Business leaders are aware that customer demand is a driving force behind the need to digitally transform. The good news is that three-quarters of companies agree that a centralized technology strategy needs to be a priority. The bad news is cost-cutting usually leads to an IT budget that is barely growing, as recent estimates from Gartner show. Many business leaders are whistling in the dark, and are not taking the right actions.

Disruptive trends

Actually, it’s not technology alone that is causing the disruption. Other trends are impacting business as well. Sharing is quickly becoming the new owning. We are in the era of the sharing economy. We no longer need to own things, we can use them from other people or companies. Who needs a car when you can use a service like Uber? This will have a major impact, for instance, on the production industry. Customer experience is another trend to focus on. We all know customers are becoming more demanding: they want to consume products or services cheap, frictionless and fast. The question remains how enterprises will be able to differentiate if everyone is focusing on this customer experience. And as time progresses, more trends will shape the way we do business and talk to clients.

As the parable of the second half of the chessboard shows, the future is unfathomable, and it’s very difficult to estimate what the impact will be on the job market. Mail carriers, taxi drivers, flight attendants, news reporters and even lumberjacks are rumored to be on the verge of extinction. On the other hand, technology is creating amazing opportunities for new job categories.

What every business leader needs to understand is that the world is changing, changing fast, and they need to be prepared for what is coming. If they don’t, their companies risk the same fate as the inventor of the chessboard.